Formalising Informal Micro-enterprises (FIME)

Lead: Dr Andrew Charman
Project manager: Dr Leif Petersen and Rory Liedeman
Funders and Partners: South African Breweries, Research Project on Employment, Income Distribution & Inclusive Growth (Redi3x3), Participate, African Centre for Citizenship and Democracy, and various academics from University of the Witwatersrand, University of Western Cape, and University of Cape Town

There is a knowledge vacuum on how micro-enterprises emerge and then grow, the employment they create, their impact on local economic development, the nature of their value chain linkages and impact on social cohesion.

FIME intends to address this knowledge deficit, by striving to deliver quantifiable insight into the scope and scale of micro-enterprises, business trends and growth prospects within South Africa’s informal economy, working in sites in Cape Town, Johannesburg, Ekurhuleni, EThekwini and Welkom.

FIME is providing direction on this challenge through its overarching aim of;

  1. Establishing an evidential platform from which to encourage entrepreneurship and investment in informal businesses,
  2. Shaping enterprise strategies to enhance their competitiveness, and
  3. Influencing government policies to best support the growth of micro-enterprises for their incorporation within South Africa’s formal economy.

The execution of these goals has been undertaken over four FIME phases;

Phase 1 (2010 – 2011) – Research Methodology Development:

The first phase of the FIME project saw the development of a unique research methodology known as the small-area census approach. The method is described in the Journal of Mixed Methods (see paper Charman, Petersen, Piper, Liedman and Legg, 2015). In this phase, the research was undertaken in Delft South, Vrygrond, Sweet Home Farm and Philippi.

The research took place in sites representative of the economic, social and racial profile of marginalised communities. In phase 1, qualitative research focused on the grocery retail sector wherein we sought to document the changing nature of the township market and understand the emerging conflict among shop keepers. We also undertook research on the spatial distribution of liquor retailers and sought to understand the response of unlicensed traders to the changing policy environment and prohibition on unlicenced trade. The FIME project supported three students to advance their studies at Masters level, building on the project research findings.

Phase 2 (2012-2014) – Broadening of the Research Scope and Scale:

In FIME Phase 2, the small-area census approach was extended to area studies in Gauteng (Ivory Park, Tembisa,) Durban (KwaMashu) and Cape Town (Imizamo Yethu). At the conclusion of the Ivory Park research, the FIME project had conducted research in 8 sites, identifying 10,000 enterprises and undertaking detailed interviews with 3000 entrepreneurs. During this phase, the project initiated a series of studies into the social-spatial and political dynamics of particular aspects of the informal economy. Studies were undertaken on the shebeen environment in Sweet Home Farm and on street traders in Ivory Park, Gauteng. Some of the outcomes of these studies are showcased on the emergentcity platform. An important component of these studies was the work we undertook in collaboration with small groups of community members whereby we sought to explore the dynamics of their businesses (including issues of policy and life experiences) through the use of participatory visual methods. This resulted in a series of digital stories told by shebeen owners and a photovoice project with street photographers.

The research results have been documented in a series of academic papers and visual products, including maps and infographics. In order to share the learning with policy makers, the FIME project undertook two exhibition events at which we engaged with policy makers, senior civil servants, academics and development practitioners. These events were well attended and showed our intention to influence policy and strategy towards the informal economy through a process of knowledge exchange and advocacy grounded in evidence.

Phase 3 (2014- Aug 2016) – Dissemination of Knowledge:

In FIME phase 3, two additional small areas studies were undertaken, one in Thabong (Free State) and a resurvey of Delft South (Western Cape). The survey of Delft South enabled SLF to compare the shifts and transitions within one township economy over time, including spatial changes. The results of this research have been published in a REDI3x3 working paper. Significantly, the research discovered that the number of micro-enterprises had doubled from 879 in 2010 to 1798 in 2015. All business sectors (apart from spaza shops and phone businesses) recorded an increase in numbers. The research identified the important role of survivalist businesses in providing a livelihood for unemployed people, especially middle-aged women. The findings from Delft South were shared with a public audience at an exhibition event in November 2015. Over 70 representatives of government, business, academia and civil society organisations attended the exhibition.

In depth social studies under undertaken on various topics, including street traders in Cape Town; township food service businesses; micro-manufacturing; the informal encroachment of inner city market malls examining the case in Wynberg, Cape Town, and the grey market for cigarettes sold through spaza shops. (see information booklets here).

An important part of FIME Phase III was our engagement with policy makers. In this process, we were able to draw on a range of product outcomes, which included:

  • Academic publications,
  • A suite of spatial tools including business distribution maps and street level diagrams.
  • In-house publications (booklets; infographic; articles).

The engagement process has entailed undertaking high-level meetings with politicians and policy makers; providing training sessions on the informal economy; participating in government organised workshops; meetings with industry experts, specialist and academics for mutual learning and sharing of experiences; and presenting the research findings to an academic audience.

The FIME research over Phases I-III has been translated into practices with the Ivory Park Township Economic Revitalisation Project. This new project – an enterprise development concept for revitalising the township in Ivory Park, Johannesburg, has three components: an infrastructure development component to provide business infrastructure for traders and micro-enterprises, an enterprise development component that provides training and business support to enterprises in 10 priority sectors and a social and community infrastructure component that aims to improve facilities (such as sports fields, Wi-Fi) within an integrated spatial concept.

Phase 4 (Aug 2016 – Dec 2016) – New Frontiers:

In the next (IV Phase) of FIME, we will continue our emphasis on original research, policy engagement and innovating development practice. Research will be undertaken in the following areas:

  • Urban food security and the informal economy,
  • Informal finance systems
  • Urban land constraints (access, land use and tenure)
  • Market dynamics.

Read more about the research approach and a spatial analysis of township business dynamics in these two key publications.

Funders & Partners